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Diagnosing andChanging

OrganizationalCulture

Based on the CompetingValues Framework

REVISED EDITION

The Jossey-BassBusiness & Management Series

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Diagnosing and Changing

Organizational Culture

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Kim S. Cameron

Robert E. Quinn

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Diagnosing andChanging

OrganizationalCulture

Based on the CompetingValues Framework

REVISED EDITION

The Jossey-BassBusiness & Management Series

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Copyright 2006 by John Wiley & Sons, Inc. All rights reserved.

Published by Jossey-BassA Wiley Imprint989 Market Street, San Francisco, CA 94103-1741 www.josseybass.com

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First edition was published under same title by Addison-Wesley in 1999.

Library of Congress Cataloging-in-Publication Data

Cameron, Kim S.Diagnosing and changing organizational culture : based on the competing values framework /

Kim S. Cameron, Robert E. Quinn.Revised ed.p. cm.(The Jossey-Bass business & management series)

Includes bibliographical references and index.ISBN-13 978-0-7879-8283-6 (alk. paper)ISBN-10 0-7879-8283-0 (alk. paper)1. Organizational change. 2. Corporate culture. I. Quinn, Robert E. II. Title. III. Series. HD58.8.C32 2006658.4'06dc22

2005023398

Printed in the United States of AmericaREVISED EDITION

PB Printing 10 9 8 7 6 5 4 3 2 1

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www.josseybass.com

Contents

Preface vii

Acknowledgments xi

The Authors xii

1. An Introduction to Changing Organizational Culture 1The Need to Manage Organizational Culture 2

The Need for Culture Change 7

The Power of Culture Change 12

The Meaning of Organizational Culture 16

Caveats 19

2. The Organizational Culture Assessment Instrument 23Instructions for Diagnosing Organizational Culture 24

Scoring the OCAI 25

3. The Competing Values Framework 31The Value of Frameworks 31

Development of the Competing Values Framework 33

The Four Major Culture Types 37

Applicability of the Competing Values Model 45

Total Quality Management 49

Human Resource Management Roles 51

Culture Change over Time 53

Culture Change in a Mature Organization 57

Summary 59

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vi CONTENTS

4. Constructing an Organizational Culture Profile 63Plotting a Profile 63

Interpreting the Culture Profiles 69

Summary 81

5. Using the Framework to Diagnose and ChangeOrganizational Culture 83

Planning for Culture Change: An Example 85

Steps for Designing an Organizational Culture Change Process 87

Supplementing the OCAI Methodology 105

6. Individual Change as a Key to Culture Change 117Critical Management Skills 118

Personal Management Skills Profile 122

Personal Improvement Agendas 132

7. A Condensed Formula for Organizational CultureChange 139

Appendix A: Organizational Culture AssessmentInstrument (OCAI): Definition,Dimensions, Reliability, and Validity 143

Appendix B: Psychometric Analyses of the ManagementSkills Assessment Instrument (MSAI) 163

Appendix C: Hints for Initiating Organizational CultureChange in Each Quadrant 185

Appendix D: Suggestions for Improving PersonalManagement Competencies 197

Appendix E: Forms for Plotting Profiles 221

References and Suggested Reading 227

Index 234

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Preface

This book was written to help you diagnose and initiate change inorganizational culture, whether you are a manager, teacher, consul-tant, or change agent. We were motivated to write this book be-cause of our own observation that organizations often fail in theirchange and improvement efforts because of their inability to bringabout culture change. We were also motivated because of our con-viction that the Competing Values Framework can be effectivelyapplied to several important aspects of organizational and personalperformance. We know of consulting firms in several countries thathave adopted the framework as a key part of their services. And weknow of business, government, and educational organizations thathave dramatically improved their performance as a result of apply-ing the processes and approaches explained in the book, as well asindividual managers who have become more effective by personal-izing the principles we discuss. Of course, we dont claim to havefound a silver bullet or a panacea for all organizational and man-agerial problems. Rather, we have written the book to share a set oftools and procedures that our own empirical research and consult-ing experiences have found to be useful in assisting with culturaland personal change in organizations.

This book will be most useful to (1) consultants and changeagents charged with helping organizations and managers im-plement change and with making sense of their own culture; (2)teachers interested in helping students understand organizationalculture, the change process, and the power of theoretical frame-works in guiding change efforts; and (3) managers who are interested

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viii PREFACE

in identifying ways to effectively lead a culture change effort whilefinding ways to match their personal style and capabilities with thedemands of the organizations future environment. This book,therefore, may be appropriate for the college classroom, the train-ing and development center, the executives bookshelf, or the con-ference table around which employees meet to participate in theculture change process.

This book offers you three contributions: (1) validated instrumentsfor diagnosing organizational culture and management competency, (2)a theoretical framework for understanding organizational culture, and(3) a systematic strategy for changing organizational culture and per-sonal behavior. It is intended to be a workbook in the sense that youcan complete the instruments and plot your own culture profile inthe book itself, and you can also use it as a resource for leading aculture change process. The management competency assessmentinstrument also helps facilitate personal change in support of thedesired culture change. The book can also serve as an informationsource for explaining a robust framework of culture types. This frame-work has proved to be very useful to a variety of companies in clar-ifying the culture change process as well as instigating significantmanagerial leadership improvement.

In Chapter One, we discuss the importance of understandingorganizational culture and its central place in facilitating or in-hibiting organizational improvement efforts. We illustrate how cul-ture change can foster dramatic improvement in organizationaleffectiveness or else how it can be the major obstacle that keeps or-ganizations from fulfilling their objectives.

In Chapter Two, we provide the instrument for diagnosing or-ganizational culture and instructions for how to complete and scoreit. This instrumentthe Organizational Culture Assessment In-strument (OCAI)produces an overall organizational culture pro-file. Six dimensions of organizational culture are assessed. The sixdimensions are based on a theoretical framework of how organiza-tions work and the kinds of values on which their cultures arefounded. The OCAI identifies what the current organizational cul-

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ture is like, as well as what the organizations preferred or future cul-ture should be like.

Chapter Three provides a more thorough explanation of the the-oretical framework on which the OCAI is based. This frameworkthe Competing Values Frameworkexplains the underlying valueorientations that characterize organizations. These value orienta-tions are usually competing or contradictory to one another. Thechapter explains how these values, and the organizational culturesthat emerge from them, change over time and how the frameworkis applicable for making sense of a variety of organizational phe-nomena, including structure, quality, leadership, and managementskills.

Chapter Four contains a step-by-step process for producing anorganizational culture profile, identifying the ways in which the or-ganizations culture should change, and formulating a strategy foraccomplishing that change. Information about the cultures of almostone thousand organizations is provided for comparison purposes.

Chapter Five provides a six-step methodology for guiding a cul-ture change strategy. Also presented are examples of how several dif-ferent organizations used the OCAI to diagnose their current andpreferred organizational cultures. We illustrate how the organizationsdesigned a strategy to change their current culture to better matchtheir preferred culture. These examples and the methodology pro-vide systematic guidelines to managers and change agents who arecharged with changing their own organizations culture.

Chapter Six focuses on the personal change needed to supportand facilitate culture change. It explains critical management com-petencies that are typical of effective managers, and it provides amethodology for helping managers develop a personal improve-ment agenda. Included is a diagnostic instrument that has beenused with managers in more than a thousand organizations world-wide. Use of the diagnostic instrument is an important element inaligning managerial competencies with desired culture change.

Chapter Seven summarizes the key points in the book and pro-vides a condensed summary formula to guide culture change efforts.

PREFACE ix

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We provide five appendixes. Appendix A contains a more rig-orous and scientifically based discussion of the OCAI and the Com-peting Values Framework. Its intent is to provide researchers andorganizational scholars with the evidence they may require in orderto use this instrument to study organizational cultures and culturechange. Evidence for the validity and reliability of the OCAI is pro-vided, as well as a discussion of cultural definitions and the power-ful impact of cultural change on effectiveness. This material may beof greater interest to researchers and organizational scholars than tomanagers and change agents.

Appendix B provides an instrument that helps managers iden-tify the key competencies they will need to develop or improve inorder to foster organizational culture change. A discussion of the in-struments validity and usefulness precedes the presentation of thequestions themselves. The instrument is the Management Skills As-sessment Instrument (MSAI). Information is provided for obtainingscoring and feedback reports for managers who are involved in theculture change effort as part of the strategy to align managementcompetencies with the organizational culture change initiative.

Appendix C provides suggestions for initiating culture changein each of four types of cultures. These suggestions are providedmerely as thought starters and idea generators when extra help isneeded. They have come from managers and change agents whohave engaged in the culture change process described in this book.

Appendix D provides lists of suggestions for improving man-agement skills and competencies associated with the MSAI. Thesesuggestions were generated by managers who have successfully im-plemented personal change efforts in improving their own man-agerial competencies.

Appendix E contains some extra plotting forms and profileforms to be used as part of the culture change initiative.

September 2005 KIM S. CAMERONAnn Arbor, Michigan ROBERT E. QUINN

x PREFACE

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Acknowledgments

We have been educated and informed by many colleagues in ourwork on organizational culture over the years. In particular, Jeff DeGraff, Robert Hooijberg, and Frank Petrock have helped us thinkthrough the culture change methodology. Several of our colleagueshave conducted insightful and informative research on our frame-work, including Wayne Brockbank, Lee Collett, Dan Denison,Susan Faerman, Sarah Freeman, Jack Krackower, Michael McGrath,Carlos Mora, John Rohrbaugh, Gretchen Spreitzer, Michael Thomp-son, David Ulrich, Arthur Yeung, and Ray Zammuto. Outstandinginsights and suggestions were provided on the book manuscript byDick Beckhard, Ed Schein, and Jon Van Maanen, and helpful re-views by Peter Frost, Tom Gregoire, and Deone Zell. Particularthanks are due to our editor, Kathe Sweeney at Jossey-Bass, for hercontinued support and friendship, and to a very competent supportteam led by Jessie Mandle at Jossey-Bass. Of course, even though wewould like to blame these folks for any mistakes, oversights, orwrong-headed thinking that might remain in the manuscript, weaccept responsibility for it. They have done their best with us.

Most important, we want to acknowledge and thank our sweet-hearts, Melinda and Delsa, and our children, Katrina Cameron Pow-ley, Tiara Cameron Wartes, Asher Cameron, Cheyenne CameronRobertson, Brittany Cameron Corbett, Austin Cameron, and CamCameron, as well as Shauri Quinn, Ryan Quinn, Shawn Quinn,Kristin Quinn Ellis, Travis Quinn, and Garrett Quinn. Their loveof one another and of us has created a culture that we never wantto change.

K.S.C.R.E.Q.

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The Authors

Kim S. Cameron is professor of management and organization atthe University of Michigan Business School and professor of highereducation in the School of Education at the University of Michi-gan. He has served as dean and Albert J. Weatherhead Professor ofManagement in the Weatherhead School of Management at CaseWestern Reserve University, as associate dean and Ford MotorCo./Richard E. Cook Professor in the Marriott School of Manage-ment at Brigham Young University, and as a department chair anddirector of several executive education programs at the Universityof Michigan. He also served on the faculties of the University ofWisconsin-Madison and Ricks College. He organized and directedthe Organizational Studies Division of the National Center forHigher Education Management Systems in Boulder, Colorado.

Camerons past research on organizational virtuousness, down-sizing, effectiveness, culture, and the development of leadership ex-cellence has been published in more than eighty articles and ninebooks: Coffin Nails and Corporate Strategies (Prentice Hall, 1982), De-veloping Management Skills (Prentice Hall, 6th ed., 2005), Diagnosing andChanging Organizational Culture (Addison-Wesley, 1999), Organiza-tional Decline (Ballinger, 1988), Leading with Values (Cambridge, 2006),Organizational Effectiveness (Academic Press, 1983), Paradox and Trans-formation (Ballinger, 1988), Positive Organizational Scholarship (Berrett-Koehler, 2003), and The Competing Values Framework (Elgar, 2006).His current research is on the positive dynamics in organizations that

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lead to spectacular performance. Specifically, he has been funded tostudy virtuousness in organizations and its relationship to performance.

Cameron received his bachelor of science and master of sciencedegrees from Brigham Young University and his master of arts anddoctoral degrees from Yale University. He served on the NationalResearch Council, was president of Bay Asset Funding Corporation,and was a Fulbright Distinguished Scholar. He is a graduate of Lead-ership Cleveland Class of 2000 and a recipient of the Organiza-tional Behavior Teaching Societys Outstanding Educator award.He currently consults with a variety of business, government, andeducational organizations in North America, South America, Asia,Europe, and Africa.

He is married to the former Melinda Cummings and has sevenchildren.

Robert E. Quinn holds the Margaret Elliot Tracey Collegiate Pro-fessorship at the University of Michigan and serves on the organi-zation and management faculty at the University of MichiganBusiness School. He is one of the cofounders of the Center for Pos-itive Organizational Scholarship. Quinns research and teaching in-terests focus on organizational change and effectiveness. He haspublished fourteen books on these subjects.

He is particularly known for his work on the Competing ValuesFramework, recognized as one of the forty most important modelsin the history of business. Using his approach, researchers have gen-erated numerous books and articles to clarify complex dynamics sur-rounding topics in many disciplines. Practitioners across all sectors,in many organizations, have used his work to transform both cul-ture and practice. Furthermore, thousands of managers have trainedin his methods at the University of Michigan and through the useof his textbooks. He has personally assisted numerous large organi-zations in the process of change.

His B.S. and M.S. degrees were obtained from Brigham YoungUniversity and his Ph.D. from the University of Cincinnati. He and

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xiv THE AUTHORS

his wife, Delsa, have six children, Shauri, Ryan, Shawn, Kristin,Travis, and Garrett.

In recent years, Quinn has completed a trilogy of books on per-sonal and organizational transformation: the best seller DeepChange: Discovering the Leader Within (1996), Change the World:How Ordinary People Can Accomplish Extraordinary Results (2000),and Building the Bridge as You Walk on It: A Guide to Change (2004),all published by Jossey-Bass. At the Center for Positive Organiza-tional Scholarship, he is currently working on questions concern-ing extraordinary performance.

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1

1

AN INTRODUCTION TO CHANGINGORGANIZATIONAL CULTURE

No organization in the twenty-first century would boast about itsconstancy, sameness, or status quo compared to ten years ago. Sta-bility is interpreted more often as stagnation than steadiness, andorganizations that are not in the business of change and transitionare generally viewed as recalcitrant. The frightening uncertaintythat traditionally accompanied major organizational change hasbeen superseded by the frightening uncertainty now associated withstaying the same.

The father of modern management, Peter Drucker, concludedthat We are in one of those great historical periods that occur every200 or 300 years when people dont understand the world anymore,and the past is not sufficient to explain the future (quoted in Chil-dress and Senn, 1995, p. 3) Unremitting, unpredictable, and some-times alarming change makes it difficult for any organization ormanager to stay current, to accurately predict the future, and tomaintain constancy of direction. The failure rate of most plannedorganizational change initiatives is dramatic. It is well known, forexample, that as many as three-quarters of reengineering, total qual-ity management (TQM), strategic planning, and downsizing effortshave failed entirely or have created problems serious enough thatthe survival of the organization was threatened (Cameron, 1997).What is most interesting about these failures, however, is the re-ported reasons for their lack of success. Several studies reported thatthe most frequently cited reason given for failure was a neglect ofthe organizations culture. In other words, failure to change the or-ganizations culture doomed the other kinds of organizational

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2 DIAGNOSING AND CHANGING ORGANIZATIONAL CULTURE

changes that were initiated (Caldwell, 1994; CSC Index, 1994;Gross, Pascale, and Athos, 1993; Kotter and Heskett, 1992).

Our purpose in this book is not to offer one more panacea forcoping with our turbulent times or to introduce another managementfad. We agree with Tom Peters that in the current high-velocity en-vironment, if youre not confused, youre not paying attention.Confusion abounds, as do prescriptions and proposed panaceas. In-stead, our intent in this book is both more modest and, we believe,potentially more helpful. The book provides a framework, a sense-making tool, a set of systematic steps, and a methodology for help-ing managers and their organizations adapt to the demands of theenvironment. It focuses less on the right answers than it does on themethods and mechanisms available to help managers change themost fundamental elements of their organizations. It provides a wayfor managers almost anywhere in the hierarchy of an organization,to guide the change process at the most basic levelthe culturallevel. It provides a systematic strategy for internal or external changeagents to facilitate fundamental change that can then support andsupplement other kinds of change initiatives.

The Need to Manage Organizational Culture

Most of the scholarly literature argues that successful companiesthose with sustained profitability and above-normal financialreturnsare characterized by certain well-defined conditions (orig-inally identified by Porter, 1980). Six such conditions are believedto be crucial. The first is the presence of high barriers to entry.When other organizations face difficult obstacles to engaging in thesame business as your organizationfor example, high costs, specialtechnology, or proprietary knowledgefew, if any, competitors willexist. Fewer competitors means more revenues for your firm. A secondcondition is nonsubstitutable products. When other organizationscannot duplicate your firms product or service and no alternativesexistfor example, you are the sole supplier of a product or serviceit stands to reason that revenues are likely to be higher. Third, a


large market share enhances success by allowing your firm to capi-talize on economies of scale and efficiencies. The biggest player ina market can negotiate concessions, sell at a discount, vertically in-tegrate, or even purchase smaller competitors, thereby generatingmore revenues. A fourth condition is low levels of bargaining powerfor buyers. For example, if purchasers of your firms products becomedependent on your company because they have no alternativesources, higher revenues are an obvious result. Fifth, suppliers havelow levels of bargaining power. When suppliers, like customers, be-come dependent on your company because they have no alterna-tive, you will have higher levels of financial returns. They must sellto you, making it possible for your firm to negotiate favorable pricesand time schedules, higher levels of quality, or more proprietary fea-tures. The sixth and final condition is rivalry among competitors.Rivalry helps deflect attention away from head-to-head competi-tion with your company. Competitors struggle against one anotherinstead of targeting your firm as the central focus of attack. Equallyimportant, stiff competition is likely to raise the standards of per-formance in the entire industry. Incentives to improve are a prod-uct of rigorous competition (see Porter, 1980).

Unquestionably, these are desirable features that clearly shouldenhance financial success. They seem pretty much common sense.However, what is remarkable is that the most successful U.S. firmsin the past twenty years have had none of these competitive advan-tages. The top five performers in the past two decadesthose whohave literally blown away the competition in financial returnshave not been the recipients of any of the so-called prerequisites forsuccess. These highly successful firms are Southwest Airlines(21,775% return), Wal-Mart (19,807% return), Tyson Foods(18,118% return), Circuit City (16,410% return), and Plenum Pub-lishing (15,689% return) (Compustat Data Services, 2005).

Think of it. If you were going to start a business and wanted tomake a killing, the markets you will most likely avoid are airlines,discount retailing, food distribution, consumer electronic sales, andpublishing. The list of industries represented by these five highly

AN INTRODUCTION TO CHANGING ORGANIZATIONAL CULTURE 3


successful firms looks like an impending disaster for new entrantsmassive competition, horrendous losses, widespread bankruptcy,virtually no barriers to entry, little unique technology, and manysubstitute products and services. None of these firms entered the in-dustry with a leadership position in market share. Yet these fivefirms have outperformed all rivals, even with no special competitiveadvantages.

What differentiates these extraordinarily successful firms fromothers? How have they been able to make it when others havefailed? How did Wal-Mart take on Sears and Kmartthe twolargest retailers in the worldand, figuratively speaking, eat theirlunch? While Wal-Mart prospered, its largest rivals were forced tosell off divisions, replace CEOs (more than once), downsize dra-matically, and close stores wholesale. How did Southwest Airlinesthrive when several of its competitors went belly-up (rememberEastern, Pan Am, Texas Air, PeopleExpress)? How did Circuit City,Tyson Foods, and Plenum Publishing succeed when their competi-tors have gone out of business so rapidly that its hard to keep up?The key ingredient in each case is something less tangible, less bla-tant, but more powerful than the market factors listed earlier. Themajor distinguishing feature in these companies, their most impor-tant competitive advantage, the most powerful factor they all high-light as a key ingredient in their success, is their organizationalculture.

The sustained success of these firms has had less to do withmarket forces than with company values, less to do with competi-tive positioning than with personal beliefs, and less to do with re-source advantages than with vision. In fact, it is difficult to nameeven a single highly successful company, one that is a recognizedleader in its industry, that does not have a distinctive, readily iden-tifiable organizational culture. Name the most successful firms youknow today, from large behemoths like Coca-Cola, Disney, Gen-eral Electric, Intel, McDonalds, Microsoft, Rubbermaid, Sony, andToyota to small entrepreneurial start-ups. Virtually every leadingfirm you can name, small or large, has developed a distinctive cul-



ture that is clearly identifiable by its employees. This culture issometimes created by the initial founder of the firm (such as WaltDisney). Sometimes it emerges over time as an organization en-counters and overcomes challenges and obstacles in its environ-ment (as at Coca-Cola). Sometimes it is developed consciously bymanagement teams who decide to improve their companys perfor-mance in systematic ways (as General Electric did). Simply stated,successful companies have developed something special that super-sedes corporate strategy, market presence, and technological ad-vantages. Although strategy, market presence, and technology areclearly important, highly successful firms have capitalized on thepower that resides in developing and managing a unique corporateculture. This power abides in the ability of a strong, unique cultureto reduce collective uncertainties (that is, facilitate a common in-terpretation system for members), create social order (make clear tomembers what is expected), create continuity (perpetuate key val-ues and norms across generations of members), create a collectiveidentity and commitment (bind members together), and elucidatea vision of the future (energize forward movement) (see Trice andBeyer, 1993).

Most organizational scholars and observers now recognize thatorganizational culture has a powerful effect on the performance andlong-term effectiveness of organizations. Empirical research has pro-duced an impressive array of findings demonstrating the importanceof culture to enhancing organizational performance (for reviews, seeCameron and Ettington, 1988; Denison, 1990; and Trice and Beyer,1993).

Kotter and Heskett (1992) interviewed seventy-five highly re-garded financial analysts whose job is to closely follow certain in-dustries and corporations. Each analyst compared the performanceof twelve highly successful firms to ten lower-performing firms. Al-though analysts are stereotyped as focusing almost exclusively onhard data, only one of the seventy-five indicated that culture hadlittle or no impact on firm performance. All acknowledged cultureas a critical factor in long-term financial success. In Appendix A,



we summarize several scientific studies that report a positive rela-tionship between dimensions of organizational culture and organi-zational effectiveness. For those interested in empirical evidencethat supports the assessment procedures and culture change method-ology explained in this book, Appendix A will be a helpful reviewof the academic literature.

In addition to organization-level effects, the impact of organi-zational culture on individuals (employee morale, commitment,productivity, physical health, emotional well-being) is also welldocumented (for a review, see Kozlowski, Chao, Smith, and Hed-lund, 1993). With health care costs still skyrocketing, burnout at anall-time high, erosion of employee loyalty to firms costing millionsof dollars a year in replacement and retraining, organizational se-crets lost due to sabotage and defections, and lawsuits and otherforms of retribution by disaffected employees, the impact of an or-ganizations underlying culture on individuals is also an importantarea of concern. Moreover, we will explain later in the book thatculture change, at its root, is intimately tied to individual change.Unless managers are willing to commit to personal change, the or-ganizations culture will remain recalcitrant.

Our main focus in this book is on helping managers, changeagents, and scholars facilitate and manage organizational culturechange. Our purpose is to help individuals adopt effective ways ofdiagnosing and changing culture in order to enhance organizationalperformance. We provide a framework as well as a methodology forimplementing this change process, and we integrate a model of in-dividual-level change as a way to foster cultural transformation andto align personal managerial behavior with the culture change.Since culture is such a crucial factor in the long-term effectivenessof organizations, it is imperative that the individuals charged withstudying or managing organizational culture be able to measure keydimensions of culture, develop a strategy for changing it, and beginan implementation process. This book helps accomplish those aims.

We begin by discussing the critical need for culture change inmost modern organizations. Frequent and chaotic vacillations inthe external environment create the risk that the existing organi-



zational culture will inhibit rather than contribute to future corpo-rate success. We also briefly address the meaning of the term orga-nizational culture. To understand how culture change can enhanceorganizational performance, it is important that we make clear whatis and isnt culture. All this establishes a groundwork for introduc-ing our framework of the core dimensions of organizational culture.Along with that framework, we introduce an instrument and amethod for diagnosing and initiating cultural change, and we sup-plement that with a personal management competency assessmentinstrument and improvement tool that is congruent with the frame-work. We provide some examples of companies that have success-fully implemented our methodology, and we provide some practicalhints for how others might successfully implement culture change.

This book, in other words, serves both as a workbook and as asource guide. It is a workbook in the sense that it assists managersand change agents to work through a systematic culture diagnosis andchange effort. It helps profile the current state of organizational cul-ture and a preferred culture for the future, and it outlines a processfor moving from the current to the preferred state. It also links a per-sonal change methodology to an organizational change methodology.

The book serves as a source guide in the sense that it helps ex-plain the core dimensions of culture and presents a theoreticalframework for understanding culture forms. That is, the book ex-plains what to look for when initiating culture change and the waysin which individual change and organizational change are linked.For individuals interested in examining the validity of this ap-proach to culture change, a summary of scientific evidence is pre-sented in Appendix One.

The Need for Culture Change

As mentioned earlier, change in organizations is pervasive becauseof the degree and rapidity of change in the external environment.The conditions in which organizations operate demand a responsewithout which organizational demise is a frequent result. Of thelargest one hundred companies at the beginning of the 1900s, for



example, only sixteen are still in existence. Of the firms on Fortunemagazines first list of the five hundred biggest companies, onlytwenty-nine firms would still be included. During the past decade,46 percent of the Fortune 500 dropped off the list.

Such dramatic change in organizational survival and effective-ness is understandable when considering the shift in the developedworld from an industrial-age economy to an information-age econ-omy. For the first time, beginning in the 1990s, companies spentmore money on computing and communications gear than on in-dustrial, mining, farm, and construction equipment combined.Whereas in the 1960s, approximately half of the workers in indus-trialized countries were involved in making tangible things, by theyear 2000, no developed country had more than one-eighth of itsworkforce in the traditional roles of making and moving goods.This shift away from industrialization and toward information isalso illustrated by the fact that more information was produced lastyear than was produced in the previous five thousand years. Aweekday edition of the New York Times or the International HeraldTribune contains more information than the average person waslikely to come across in a lifetime during the eighteenth century.The total amount of information available to the average persondoubles every year.

The rate of technological change associated with this informa-tion explosion has created an environment intolerant of the statusquo. Todays average wristwatch contains more computing powerthan existed in the entire world before 1960. The technology cur-rently exists to put the equivalent of a full-size computer in a wrist-watch or to inject the equivalent of a laptop computer into thebloodstream. The newest computers are relying on etchings ontomolecules instead of silicone wafers. The mapping of the humangenome is probably the greatest source for change, for not only cana banana now be changed into an agent to inoculate people againstmalaria, but new organ development and physiological regulationspromise to dramatically alter peoples lifestyles. Over a hundred an-imals have been patented to date, and four million new patent ap-



plications are filed each year related to bioengineering (Enriquez,2000). Almost no one dares predict the changes that will occur inthe next ten years. Moreover, not only is change ubiquitous and un-predictable, but almost everyone assumes that its velocity will in-crease exponentially (Cameron, 2003; Quinn, 2000). Such rapidand dramatic change implies that no organization can remain thesame for long and survive. The current challenge, therefore, is notto determine whether to change but how to change to increase or-ganizational effectiveness. The demise of some of the Fortune 500companies undoubtedly resulted from slow, laggard, or wrong-headed change efforts.

For instance, the three most common organizational change ini-tiatives implemented in the last two decades are TQM initiatives,downsizing initiatives, and reengineering initiatives (Cameron,1997). Organizations that have implemented quality initiatives inorder to enhance effectiveness, however, have by and large fallenshort. Rath and Strong (a consulting firm) surveyed Fortune 500companies and found that only 20 percent reported having achievedtheir quality objectives, and over 40 percent indicated that theirquality initiatives were a complete flop. A study of thirty qualityprograms by McKinsey (another consulting firm) found that two-thirds had stalled, fallen short, or failed. And Ernst and Youngsstudy of 584 companies in four industries (autos, banks, computers,and health care) in the United States, Japan, Germany, and Canadafound that most firms had not successfully implemented their totalquality practices. Most firms labeled TQM a failure and were actu-ally cutting back their quality budgets (see Cameron, 1997, for de-tails of various studies, including those mentioned here).

Similarly, nearly every organization of moderate size or larger hasengaged in downsizing in the past decade. Downsizing has been an-other attempt to improve productivity, efficiency, competitiveness,and effectiveness. Unfortunately, two-thirds of companies that down-size end up doing it again a year later, and the stock prices of firmsthat downsized during the 1990s actually lagged the industry averagea decade later. A survey of corporate executives in six industrialized



countries found that less than half had achieved their cost-cuttinggoals and even fewer met operating objectives such as improvedproductivity. Another survey found that 74 percent of senior man-agers in downsized companies said that morale, trust, and produc-tivity suffered after downsizing, and half of the 1,468 firms in stillanother survey indicated that productivity deteriorated after down-sizing. Almost three-quarters of firms in another study were foundto be worse off in the long term after downsizing than they were be-fore. A majority of organizations that downsized in a fourth surveyfailed to achieve desired results, with only 9 percent reporting animprovement in quality. These outcomes led one editorialist to ac-cuse organizations of dumbsizing instead of downsizing and an-other writer to conclude that downsizing, as commonly practiced,is a dud (see Cameron, 1997, for complete references).

A third common approach to enhancing organizational perfor-mance has been reengineering, the attempt to completely redesignthe processes and procedures in an organization. Similar to TQMand downsizing initiatives, however, evidence suggests that this ap-proach to change has also had a checkered success record. A surveywas conducted of reengineering projects by the consulting firm thatinvented the reengineering change process (CSC Index, 1994). Inall, 497 companies in the United States and another 1,245 compa-nies in Europe were polled. The results showed that 69 percent ofthe firms in the United States and 75 percent of the firms in Europehad engaged in at least one reengineering project. Unfortunately,85 percent of those firms reported little or no gain from their effort.Less than half, for example, achieved any change in market share,one of the primary goals. The authors concluded that reengineer-ing was not enough to achieve desirable change. It had to be inte-grated with an overall approach to changing an organizationsculture. In other words, the failure of reengineering (as well as TQMand downsizing) occurred in most cases because the culture of theorganization remained the same. The procedure was treated as atechnique or program of change, not as a fundamental shift in theorganizations direction, values, and culture.


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The point we are reiterating with these examples is that with-out another kind of fundamental change, namely, a change in or-ganizational culture, there is little hope of enduring improvementin organizational performance. Although the tools and techniquesmay be present and the change strategy implemented with vigor,many efforts to improve organizational performance fail because thefundamental culture of the organizationvalues, ways of thinking,managerial styles, paradigms, approaches to problem solvingremains the same.

Extensive evidence of this fact has emerged from empiricalstudies conducted in more than one hundred organizations that hadengaged in TQM and downsizing as strategies for enhancing effec-tiveness (Cameron, 1995, 1998; Cameron, Bright, and Caza, 2004;Cameron, Freeman, and Mishra, 1991). The results of those studieswere unequivocal. The successful implementation of both TQMand downsizing programs, as well as the resulting effectiveness ofthe organizations performance, depended on having the improve-ment strategies embedded in a culture change. When TQM anddownsizing were implemented independent of a culture change,they were unsuccessful. When the culture of these organizationswas an explicit target of change, so that the TQM or downsizinginitiatives were embedded in an overall culture change effort, theywere successful. Organizational effectiveness increased. Culturechange was key.

This dependence of organizational improvement on culturechange is due to the fact that when the values, orientations, defin-itions, and goals stay constanteven when procedures and strate-gies are alteredorganizations return quickly to the status quo. Thesame is true for individuals. Personality types, personal styles, andbehavioral habits rarely change significantly, despite programs to in-duce change such as diets, exercise regimens, or charm schools.Without an alternation of the fundamental goals, values, and ex-pectations of organizations or individuals, change remains superfi-cial and of short duration (see Quinn, 1996). Failed attempts tochange, unfortunately, often produce cynicism, frustration, loss of


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trust, and deterioration in morale among organization members. Asour research has shown, organizations may be worse off than if thechange strategy had not been attempted in the first place. Modify-ing organizational culture, in other words, is a key to the successfulimplementation of major improvement strategies (TQM, downsiz-ing, reengineering) as well as adaptation to the increasing turbulentenvironment faced by modern organizations.

The Power of Culture Change

Consider the well-known case of General Motors auto assemblyplant in Fremont, California. In the 1950s, General Motors hadembarked on what was referred to as a sunbelt strategy: plantswere built in the southern and western states. Because these are allright to work states (with few unions), the United Auto Work-ers (UAW) viewed this as a union-avoidance move on the part ofthe company. But ultimately, not only were the new GM plants or-ganized by the UAW, but they became among the most hostile,conflict-ridden plants in the entire corporation. Particularly trou-blesome was the plant in Fremont, California, where the Chevro-let Nova was assembled. It was a huge facility with several millionsquare feet under one roof. By 1982, the plant was operating at adisastrously low level. Absenteeism averaged 20 percent per year,and approximately five thousand grievances were filed each year byemployees at the plantthe same as the total number of workers.It also translates to about twenty-one formally filed grievances eachworking day! More than two thousand of those grievances re-mained unresolved. Three or four times each year, a wildcat strikewould occur (people just walked off the job). Costs of assemblingthe car were 30 percent above those of its Japanese competitors,sales were trending downward, and ratings of both quality and pro-ductivity ranked the Fremont plant the worst in the company.Moreover, customer satisfaction with the Chevy Nova had hit rockbottom.


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A variety of improvement programs had been triedqualitycircles, employee relations initiatives, statistical process control,new incentive systems, tighter controls, downsizing, to name a few.Nothing worked. Quality, productivity, and satisfaction levels re-mained abysmal. Of course, it doesnt take a rocket scientist to fig-ure out that the company could not afford to continue operating atthat level of performance. The reputation of the entire corporationand all its divisions (Cadillac, Buick, Oldsmobile, Pontiac, Chevro-let, and GMC) was being negatively affected by the poor-qualityproduct, the cost of simply keeping the plant running was overlyburdensome, and management had nothing but grief from thisgroup of employees. The decision was made to close the plant at theend of 1982.

Then GM did something interesting. The company approachedits best competitor, Toyota, and offered to design and build a car to-gether. GM was losing market share to Toyota, the Toyota produc-tion system was generally regarded as the best in the world at thetime, and GM was having a difficult time trying to figure out howto fix its disastrous performance record, especially with the now-defunct Fremont plant. Toyota jumped at the chance. After all,GM was the worlds largest company with the worlds largest sup-plier and dealer networks, and it was a chance for Toyota to estab-lish a firm footing on U.S. soil. GM offered to use the Fremontfacility, but the plant was not to be remodeled. Old equipment hadto be used. Toyota said, Fine. GM indicated that because of thelabor agreement, the joint venture couldnt hire just anyone. UAWworkers had to be hired first, and they would come back on the basisof seniority. The oldest and most recalcitrant employees, the oneswho had complained about management the longest, were givenfirst crack at jobs. Toyota said, Fine. Toyota had just one request,and that was to allow Toyota managers to run the place, not GMmanagers. GM said, Fine. In late 1985, the plant was opened. Thename was changed to NUMMINew United Motors Manufac-turing Incorporated. For the first two years, the Chevy Nova was


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produced; then it was phased out and replaced by the Geo Prismand the Toyota Corolla. Table 1.1 shows the performance data forthe Fremont plant and the NUMMI plant after one year of opera-tion, at the end of 1986.

Sales trends at the NUMMI plant were positive, quality and cus-tomer satisfaction were the highest in the company, the ToyotaCorolla had fewer glitches than the comparable car produced inJapan, and productivity doubled the corporate average. Two decadeslater, the NUMMI plant continues to lead the company in mostmonths in quality and productivity. Although more than twentyyears old, this experiment still serves as an example to GM (and toother manufacturing businesses) of the dramatic improvement thatis possible.

How did the turnaround occur? What accounts for the dramaticimprovement in performance? Multiple factors were involved, ofcourse, but the best explanation of the most important factor canbe illustrated by an interview with one of the production employ-ees at NUMMI. He had worked in the facility for more than twenty


Table 1.1 Comparison of GMs Fremont and NUMMI Plants

1982 1986GM Fremont Plant GM NUMMI Plant

Employees 5,000 2,500

Absenteeism 20% 2%

Unresolved grievances 2,000 0

Total annual grievances 5,000 2

Wildcat strikes 34 0

Product Chevrolet Nova Chevrolet Nova 1988Geo PrismToyota Corolla

Assembly costs per car 30% over Japanese Same as Japanese

Productivity Worst in GM Double GM average

Quality Worst in GM Best in GM

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years. He was asked to describe the difference he experienced be-tween the plant while it was managed by GM and the plant afterthe joint venture was formed. This UAW member said that priorto the joint venture, he would go home at night chuckling to him-self about the things he had thought up during the day to mess upthe system. Hed leave his sandwich behind the door panel of a car,for example. Three months later, the customer would be drivingdown the road and wouldnt be able to figure out where that terri-ble smell was coming from. It would be my rotten sandwich in thedoor, he chuckled to himself. Or he would put loose screws in acompartment of the frame that was to be welded shut. People rid-ing in the car would never be able to tell exactly where that rattlewas coming from because it would reverberate throughout the en-tire car. Theyll never figure it out, he said.

Now, he commented, because the number of job classifica-tions has been so dramatically reduced [from more than 150 to 6],we have all been allowed to have personal business cards and tomake up our own titles. The title I put on my card is director ofwelding improvement. His job was to monitor certain robots thatspot-welded parts of the frame together. Now when I go to a SanFrancisco 49ers game or a Golden State Warriors game or a shop-ping mall, I look for Geo Prisms and Toyota Corollas in the parkinglot. When I see one, I take out my business card and write on theback of it, I made your car. Any problems, call me. I put it underthe windshield wiper of the car. I do it because I feel personally re-sponsible for those cars.

The difference between Fremont in 1982 and Fremont in 1992,at the time the interview was conducted, is a reflection of an orga-nizational culture change. It was a gut-level, values-centered, in-the-bones change from viewing the world one way in 1982 toviewing it entirely differently a decade later. Employees had simplyadopted a different way to think about the company and their rolein it. Higher levels of productivity, quality, efficiency, and moralefollowed directly from this change in the firms culture.


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This is the kind of change that this book addresses. Unless it isintegrated with other types of change initiativesfor example,TQM, downsizing, or reengineeringit is unlikely that the changeswill be successful. The status quo will prevail. We repeat: withoutculture change, there is little hope for enduring improvement in or-ganizational performance.

The Meaning of Organizational Culture

It was not until the beginning of the 1980s that organizationalscholars began paying serious attention to the concept of culture(for example, Ouchi, 1981; Pascale and Athos, 1981; Peters andWaterman, 1982; Deal and Kennedy, 1982). This is one of the fewareas, in fact, where organizational scholars led practicing managersin identifying a crucial factor affecting organizational performance.In most instances, practice has led research, and scholars have fo-cused mainly on documenting, explaining, and building models oforganizational phenomena that were already being tried by man-agement. Organizational culture, however, has been an area inwhich conceptual work and scholarship have provided guidance formanagers as they have searched for ways to improve their organiza-tions effectiveness.

The reason organizational culture was ignored as an importantfactor in accounting for organizational performance is that it en-compasses the taken-for-granted values, underlying assumptions,expectations, collective memories, and definitions present in an or-ganization. It represents how things are around here. It reflects theprevailing ideology that people carry inside their heads. It conveysa sense of identity to employees, provides unwritten and often un-spoken guidelines for how to get along in the organization, and itenhances the stability of the social system that they experience.1

Unfortunately, people are unaware of their culture until it is chal-lenged, until they experience a new culture, or until it is made overtand explicit through, for example, a framework or model. This is


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why culture was ignored for so long by managers and scholars. It isundetectable most of the time.

Of course, there are many kinds or levels of culture that affectindividual and organizational behavior. At the broadest level, aglobal culture, such as a world religions culture or the culture of theFar East would be the highest level. Researchers such as Hofstede(1980), Aiken and Bacharach (1979), and Trompenaars (1992)have reported marked differences among continents and countriesbased on certain key dimensions. For example, national differencesexist among countries on the basis of universalism versus particu-larism, individualism versus collectivism, neutrality versus emo-tionality, specificity versus diffuseness, focus on achievement versusascription, focus on past versus present versus future, and an inter-nal focus versus an external focus (Trompenaars, 1992).

At a less general level are subgroups such as gender-based cul-tures (distinctive ways in which men and women view the world,as documented in Martin, 1990, or in Coxs 1991 work on differ-ences between black and white cultures), occupational cultures(such as Van Maanens 1975 studies of police culture), regionalcultures (such as Blauners 1964 work on regional and urban-ruralcultures in the United States), and industry cultures (such as Gor-dons 1991 work on competitiveness, historical development, coretechnology, and customer requirements that affect industry cul-tures). Each culture is generally reflected by unique language, sym-bols, rules, and ethnocentric feelings. Still less broad is the cultureof a single organization, the level at which this book is aimed. Anorganizations culture is reflected by what is valued, the dominantleadership styles, the language and symbols, the procedures androutines, and the definitions of success that make an organizationunique.

Inside an organization, subunits such as functional departments,product groups, hierarchical levels, or even teams may also reflecttheir own unique cultures. Difficulties in coordinating and inte-grating processes or organizational activities, for example, are often


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a result of culture clashes among different subunits. For instance, itis common in many organizations to hear of conflicts between mar-keting and manufacturing or of disparaging comments about theHR department or put-downs of the white coats in R&D. Onereason is that each different unit often has developed its own per-spective, its own set of values, its own culture. A variety of investi-gators have reported on the dysfunctions of subgroup culture clashes(Van Maanen and Barley, 1984, 1985; Jerimier, Slocum, Fry, andGaines, 1991). It is easy to see how these cultural differences canfragment an organization and make high levels of effectiveness im-possible to achieve. Emphasizing subunit cultural differences, inother words, can foster alienation and conflict.

On the other hand, it is important to keep in mind that eachsubunit in an organization also contains common elements typicalof the entire organization. Similar to a hologram in which eachunique element in the image contains the characteristics of the en-tire image in addition to its own identifying characteristics, subunitcultures also contain core elements of the entire organizations cul-ture in addition to their own unique elements (Alpert and Whet-ten, 1985). There is always an underlying glue that binds theorganization together (Schein, 1985; OReilly, Chatman, and Cald-well, 1991). In assessing an organizations culture, therefore, onecan focus on the entire organization as the unit of analysis, or onecan assess different subunit cultures, identify the common domi-nant attributes of the subunit cultures, and aggregate them. Thiscombination can provide an approximation of the overall organi-zational culture.

In this book, we are interested primarily in helping managersidentify ways in which their organizations culture can be diagnosedand changed. The relevant level of cultural analysis, therefore, isthe level at which change efforts are directed. This may be at theoverall organization level, or it may be at the level of a subunit su-pervised by a manager. The target is the level at which culturechange is required for organizational performance to improve.


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Caveats

We do not claim that our framework or our methodology representsthe one best or the one right way to diagnose and change organiza-tional culture. Doing so would be similar to claiming that one bestway exists to design an organization, that one best leadership styleexists, that one best method exists for measuring organizations, orthat one best set of dimensions accounts for organizational success.None of these claims, of course, is reasonable. Other authors haveproposed approaches to measuring organizational culture. Otherframeworks have been proposed in the literature. A variety of un-derlying dimensions of culture have been put forward. Some authorshave even denied that assessment and change of organizational cul-ture are possible (Fitzgerald, 1988, is one). Although we review asampling of alternative approaches in Chapter Three, our intent isnot to provide an extensive review of the culture literature in thisbook. We have done so elsewhere (see Cameron, and Ettington,1988; Beyer and Cameron, 1997). Instead, we are advocating herean approach that has several important advantages to managers andchange agents interested in diagnosing and changing culture as wellas to scholars interested in investigating organizational culture usingquantitative methods.

Our approach to diagnosing and changing organizational cul-ture offers six advantages:

It is practical: It captures key dimensions of culture that havebeen found to make a difference in organizations success.

It is timely: The process of diagnosing and creating a strategyfor change can be accomplished in a reasonable amount oftime.

It is involving: The steps in the process can include everymember of the organization, but they especially involve all who have a responsibility to establish direction, reinforcevalues, and guide fundamental change.


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It is both quantitative and qualitative: The process relies onquantitative measurement of key cultural dimensions as wellas qualitative methods including stories, incidents, andsymbols that represent the unmeasurable ambience of theorganization.

It is manageable: The process of diagnosis and change canbe undertaken and implemented by a team within theorganizationusually the management team. Outside diag-nosticians, culture experts, or change consultants are not re-quired for successful implementation.

It is valid: The framework on which the process is built notonly makes sense to people as they consider their own organi-zation but is also supported by an extensive empirical litera-ture and underlying dimensions that have a verified scholarlyfoundation.

In other words, we do not claim that ours is the single bestapproach, but we do consider it a critically important strategy inan organizations repertoire for changing culture and improvingperformance.

Note

1. John Van Maanen of the Massachusetts Institute of Technol-ogy, one of the best researchers on organizational culture in theorganizational sciences, aptly pointed out to us that leavingreaders with the suggestion that four and only four cultures rep-resent the wonderful world of organizations is a mistake. Onecan almost hear our anthropological ancestors turning over intheir graves. We want to communicate clearly that our theo-retical model was developed in order to organize organizationalculture types, but it does not pretend to be comprehensive of allcultural phenomena. Nor does it apply equally well to culturesat levels other than the organization levelfor example, na-tional cultures. The framework provides, instead, a way for or-


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ganizations to discuss and interpret key elements of organiza-tional culture that can foster change and improvement. Amajor problem in many organizations facing the need to changetheir cultures is that no language exists, no key elements or di-mensions have been identified, and no common perspective isavailable to help the conversation even get started. Changedoesnt occur because it is difficult to know what to talk aboutand what to focus on. In our experience, this framework pro-vides an intuitively appealing and easily interpretable way tofoster the process of culture change.


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23

2

THE ORGANIZATIONAL CULTUREASSESSMENT INSTRUMENT

In this chapter, we provide the Organizational Culture AssessmentInstrument (OCAI), to be used to diagnose your organizations cul-ture. The instrument is in the form of a questionnaire that requiresindividuals to respond to just six items. Longer versions of theOCAI containing more items have been developed (one is atwenty-four-item version), but the six items in this version havebeen found to be equally predictive of an organizations culture.Hence we prefer the more parsimonious version. Although there area variety of ways to assess organizational culture (see Appendix Afor a discussion), this instrument has been found to be both usefuland accurate in diagnosing important aspects of an organizationsunderlying culture. It has been used in more than a thousand orga-nizations that we know of, and it has been found to predict organi-zational performance. Its intent is to help identify the organizationscurrent culture. Thats step 1. The same instrument helps identifythe culture that organization members think should be developedto match the future demands of the environment and the opportu-nities to be faced by the company. Thats step 2.

We encourage you to take time now to answer the six questionsfor your own organization. Rate the organization in its current state,not as youd like it to be. It will take about five minutes to completethe six questions. Use the Now column.

After you have completed the instrument, take another fiveminutes to complete the instrument a second time. This time, usethe Preferred column. You should respond to the items as youwould prefer your organization to be in five years. In other words,

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if your organization is to become even more excellent, if it is toachieve its highest aspirations, if it is to become an outstanding ex-ample of high performance, if it is to even outstrip the currentlystated goals, if it is to be the benchmark for your industry, whatshould the culture be like?

We provide instructions for scoring the instrument and forcreating an organizational culture profile for your company. InChapter Five, we provide instructions for involving your entireorganization in developing a more broad-based culture assessmentas well as creating a strategy for cultural change.

Instructions for DiagnosingOrganizational Culture

The purpose of the Organizational Culture Assessment Instrumentis to assess six key dimensions of organizational culture. These di-mensions are explained in some detail in Chapter Three. In com-pleting the instrument, you will be providing a picture of thefundamental assumptions on which your organization operates andthe values that characterize it. There are no right or wrong answersfor these items, just as there is no right or wrong culture. Every orga-nization will most likely be described by a different set of responses.Therefore, be as accurate as you can in responding to the items sothat your resulting cultural diagnosis will be as precise as possible.

You are asked to rate your organization in the items. Ofcourse, you may consider multiple organizationsyour immediateteam, your subunit, or the overall organization. To determine whichis the best organization to rate, you will want to consider the orga-nization that is managed by your boss, the strategic business unit towhich you belong, or the organizational unit in which you are amember that has clearly identifiable boundaries. Because the in-strument is most helpful for determining ways to change the cul-ture, youll want to focus on the cultural unit that is the target forchange. For example, it may make little sense to try to describe the

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culture of the overall Ford Motor Company. It is simply too largeand complex. The new product design unit is significantly differentfrom a stamping plant or from the Customer Assistance Center.Therefore, as you answer the questions, keep in mind the organiza-tion that can be affected by your change strategy.

The OCAI consists of six items (see Figure 2.1). Each item hasfour alternatives. Divide 100 points among these four alternatives,depending on the extent to which each alternative is similar to yourown organization. Give a higher number of points to the alterna-tive that is most similar to your organization. For example, on item1, if you think alternative A is very similar to your organization, al-ternatives B and C are somewhat similar, and alternative D ishardly similar at all, you might give 55 points to A, 20 points eachto B and C, and 5 points to D. Just be sure that your total equals 100for each item.

Note in Figure 2.1 that the left-hand response column for theinstrument is labeled Now. These responses mean that you arerating your organization as it is currently. Complete that rating first.When you have finished, think of your organization as you think itshould be in five years in order to be spectacularly successful. Com-plete the instrument again, this time responding to the items as ifyour organization had achieved extraordinary success. Write theseresponses in the Preferred column. Your responses will thus pro-duce two independent ratings of your organizations cultureoneas it currently exists and one as you wish it to be in five years.

Scoring the OCAI

Scoring the OCAI is very easy. It requires simple arithmetic calcu-lations. The first step is to add together all A responses in the Nowcolumn and divide by 6. That is, compute an average score for the Aalternatives in the Now column. You may use the worksheet inFigure 2.2 if youd like. Next, add together all B responses and divideby 6. Repeat this computation for the C and D alternatives.

THE ORGANIZATIONAL CULTURE ASSESSMENT INSTRUMENT 25

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Figure 2.1 The Organizational Culture AssessmentInstrumentCurrent Profile

1. Dominant Characteristics Now Preferred

A The organization is a very personal place. It is like an extended family. People seem to share a lot ofthemselves.

B The organization is a very dynamic and entre-preneurial place. People are willing to stick theirnecks out and take risks.

C The organization is very results-oriented. A majorconcern is with getting the job done. People are very competitive and achievement-oriented.

D The organization is a very controlled and structuredplace. Formal procedures generally govern whatpeople do.

Total 100 100

2. Organizational Leadership Now Preferred

A The leadership in the organization is generallyconsidered to exemplify mentoring, facilitating, or nurturing.

B The leadership in the organization is generallyconsidered to exemplify entrepreneurship,innovation, or risk taking.

C The leadership in the organization is generallyconsidered to exemplify a no-nonsense, aggressive,results-oriented focus.

D The leadership in the organization is generallyconsidered to exemplify coordinating, organizing, or smooth-running efficiency.

Total 100 100

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3. Management of Employees Now Preferred

A The management style in the organization ischaracterized by teamwork, consensus, andparticipation.

B The management style in the organization ischaracterized by individual risk taking, innovation,freedom, and uniqueness.

C The management style in the organization ischaracterized by hard-driving competitiveness, highdemands, and achievement.

D The management style in the organization is char-acterized by security of employment, conformity,predictability, and stability in relationships.

Total 100 100

4. Organization Glue Now Preferred

A The glue that holds the organization together isloyalty and mutual trust. Commitment to thisorganization runs high.

B The glue that holds the organization together iscommitment to innovation and development. Thereis an emphasis on being on the cutting edge.

C The glue that holds the organization together is theemphasis on achievement and goal accomplishment.

D The glue that holds the organization together isformal rules and policies. Maintaining a smooth-running organization is important.

Total 100 100

Figure 2.1 The Organizational Culture AssessmentInstrumentCurrent Profile, Contd.

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5. Strategic Emphases Now Preferred

A The organization emphasizes human development.High trust, openness, and participation persist.

B The organization emphasizes acquiring new resources and creating new challenges. Trying newthings and prospecting for opportunities are valued.

C The organization emphasizes competitive actions and achievement. Hitting stretch targets and winning in the marketplace are dominant.

D The organization emphasizes permanence andstability. Efficiency, control, and smooth operationsare important.

Total 100 100

6. Criteria of Success Now Preferred

A The organization defines success on the basis of thedevelopment of human resources, teamwork,employee commitment, and concern for people.

B The organization defines success on the basis ofhaving the most unique or newest products. It is aproduct leader and innovator.

C The organization defines success on the basis ofwinning in the marketplace and outpacing thecompetition. Competitive market leadership is key.

D The organization defines success on the basis ofefficiency. Dependable delivery, smooth scheduling,and low-cost production are critical.

Total 100 100

Figure 2.1 The Organizational Culture AssessmentInstrumentCurrent Profile, Contd.

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Now Scores

1A2A3A4A5A6ASum (total of A Responses)Average (sum divided by 6)

1B2B3B4B5B6BSum (total of B Responses)Average (sum divided by 6)

1C2C3C4C5C6CSum (total of C Responses)Average (sum divided by 6)

1D2D3D4D5D6DSum (total of D Responses)Average (sum divided by 6)

Preferred Scores

1A2A3A4A5A6ASum (total of A Responses)Average (sum divided by 6)

1B2B3B4B5B6BSum (total of B Responses)Average (sum divided by 6)

1C2C3C4C5C6CSum (total of C Responses)Average (sum divided by 6)

1D2D3D4D5D6DSum (total of D Responses)Average (sum divided by 6)

Figure 2.2 Worksheet for Scoring the OCAI

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The second step is to add all A responses in the Preferred col-umn and divide by 6. In other words, compute an average score for theA alternatives in the Preferred column. Again, use the worksheet inFigure 2.2 if youd like. Next, add together all B responses and divideby 6. Repeat this computation for the C and D alternatives.

Following an explanation in Chapter Three of the framework onwhich the OCAI is based, we explain in Chapter Four the meaningof your average A, B, C, and D scores. Each of these scores relates toa type of organizational culture. In Chapter Four, we also provide aworksheet for you to plot these scores or to draw a picture of your or-ganizations culture. This plot serves as an organizational culture pro-file and is an important step in initiating a culture change strategy.

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3

THE COMPETINGVALUES FRAMEWORK

The OCAI is based on a theoretical model known as the Compet-ing Values Framework. This framework is extremely useful in orga-nizing and interpreting a wide variety of organizational phenomena.In this chapter, we explain why having a framework is so importantand how this framework was initially developed through researchon organizational effectiveness. We also explain the four dominantculture types that emerge from the framework. These four culturetypes serve as the foundation for the OCAI. In addition, becauseculture defines the core values, assumptions, interpretations, andapproaches that characterize an organization, we might expect thatother characteristics of organizations would also reflect the four cul-ture types. We point out examples of how this is the case. In partic-ular, we show how the Competing Values Framework is useful foridentifying the major approaches to organizational design, stages oflife cycle development, organizational quality, theories of effective-ness, leadership roles and roles of human resource managers, andmanagement skills.

The Value of Frameworks

In the last couple of decades, writers have proposed a variety of di-mensions and attributes of organizational culture. Detailed reviewsof much of that literature can be found in Cameron and Ettington(1988), Martin (1992), Trice and Beyer (1993), and Beyer andCameron (1997). To illustrate the variety of dimensions represented,a few are mentioned here. For example, Sathe (1983), Schein

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(1984), and Kotter and Heskett (1992) are among those who arguedfor cultural strength and congruence as the main cultural dimensionsof interest. Alpert and Whetten (1985) identified a holographic ver-sus idiographic dimension as critical when analyzing culture. Arnoldand Capella (1985) proposed a strong-weak dimension and aninternal-external focus dimension. Deal and Kennedy (1983) pro-posed a dimension based on speed of feedback (high speed to lowspeed) and a degree-of-risk dimension (high risk to low risk). Ernst(1985) argued for people orientation (participative versus nonpar-ticipative) and response to the environment (reactive versus proac-tive) as the key culture dimensions. Gordon (1985) identified elevendimensions of culture: clarity and direction, organizational reach,integration, top management contact, encouragement of individ-ual initiative, conflict resolution, performance clarity, performanceemphasis, action orientation, compensation, and human resourcedevelopment. Hofstede (1980) focused on power distance, uncer-tainty avoidance, individualism, and masculinity, and Kets de Vriesand Miller (1986) focused on dysfunctional dimensions of culture,including paranoid, avoidant, charismatic, bureaucratic, and polit-icized dimensions. Martin (1992) proposed cultural integration andconsensus, differentiation and conflict, and fragmentation andambiguity.1

One reason so many dimensions have been proposed is that or-ganizational culture is extremely broad and inclusive in scope. Itcomprises a complex, interrelated, comprehensive, and ambiguousset of factors. Consequently, it is impossible to ever include everyrelevant factor in diagnosing and assessing organizational culture.One more element can always be argued to be relevant. To deter-mine the most important dimensions on which to focus, therefore,it is important to use an underlying framework, a theoretical foun-dation that can narrow and focus the search for key cultural di-mensions. No one framework is comprehensive, of course, nor canone particular framework be argued to be right while others arewrong. Rather, the most appropriate frameworks should be based onempirical evidence, should capture accurately the reality being de-scribed (in other words, they should be valid), and should be able

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to integrate and organize most of the dimensions being proposed.That is the purpose of using the Competing Values Framework todiagnose and facilitate change in organizational culture. It is aframework that was empirically derived, has been found to haveboth face and empirical validity, and helps integrate many of the di-mensions proposed by various authors. A more detailed discussionof why this is so is found in Cameron and Ettington (1988, pp.369373) and Quinn (1988, pp. 3438 and 4650).

In brief, the Competing Values Framework has been found tohave a high degree of congruence with well-known and well-accepted categorical schemes that organize the way people think,their values and assumptions, and the ways they process informa-tion. That is, similar categorical schemes have been proposed inde-pendently by a variety of psychologists, among them Jung (1923),Myers and Briggs (1962), McKenney and Keen (1974), Mason andMitroff (1973), and Mitroff and Kilmann (1978). This congruenceof frameworks occurs because of an underlying similarity in peopleat the deep psychological level of their cognitive processes. Mitroff(1983, p. 5) put it this way:

The more that one examines the great diversity of world cultures,the more one finds that at the symbolic level there is an astoundingamount of agreement between various archetypal images. Peoplemay disagree and fight one another by day but at night they showthe most profound similarity in their dreams and myths. The agree-ment is too profound to be produced by chance alone. It is thereforeattributed to a similarity of the psyche at the deepest layers of theunconscious. These similar-appearing symbolic images are termedarchetypes.

Development of the CompetingValues Framework

The Competing Values Framework was developed initially from re-search conducted on the major indicators of effective organizations.The key questions asked in the investigation were these: What are

THE COMPETING VALUES FRAMEWORK 33

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the main criteria for determining if an organization is effective ornot? What key factors define organizational effectiveness? Whenpeople judge an organization to be effective, what indicators dothey have in mind? John Campbell and his colleagues (1974) cre-ated a list of thirty-nine indicators that they claimed represented acomprehensive set of all possible measures for organizational effec-tiveness. That list of indicators was analyzed by Quinn and Rohr-baugh (1983) to determine if patterns or clusters could be identified.Since thirty-nine indicators are too many to comprehend or to beuseful in organizations, they sought a more parsimonious way toidentify the key factors of effectiveness.

Those thirty-nine indicators of effectiveness were submitted toa statistical analysis, and two major dimensions emerged that orga-nized the indicators into four main clusters. (See Appendix A for amore detailed explanation of the statistical analyses in this andother studies of this framework.) One dimension differentiates ef-fectiveness criteria that emphasize flexibility, discretion, and dy-namism from criteria that emphasize stability, order, and control.That is, some organizations are viewed as effective if they are chang-ing, adaptable, and organicfor example, neither the product mixnor the organizational form stays in place very long at firms such asMicrosoft or Nike. Other organizations are viewed as effective ifthey are stable, predictable, and mechanisticfor example, mostuniversities, government agencies, and conglomerates such as Boe-ing are characterized by longevity and staying power in both designand outputs. The continuum ranges from organizational versatilityand pliability on one end to organizational steadiness and durabil-ity on the other end.

The second dimension differentiates effectiveness criteria thatemphasize an internal orientation, integration, and unity from cri-teria that emphasize an external orientation, differentiation, and ri-valry. That is, some organizations are viewed as effective if theyhave harmonious internal characteristicsfor example, IBM andHewlett-Packard have traditionally been recognized for a consistentIBM way or the H-P way. Others are judged to be effective if


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they are focused on interacting or competing with others outsidetheir boundariesfor example, Toyota and Honda are known forthinking globally but acting locally, that is, for having units adoptthe attributes of the local environment more than a centrally pre-scribed approach. The continuum ranges from organizational co-hesion and consonance on the one end to organizational separationand independence on the other.

Together these two dimensions form four quadrants, each rep-resenting a distinct set of organizational effectiveness indicators.Figure 3.1 illustrates the relationships of these two dimensions toone another. These indicators of effectiveness represent what peo-ple value about an organizations performance. They define what isseen as good and right and appropriate. The four clusters of criteria,in other words, define the core values on which judgments about or-ganizations are made.

What is notable about these four core values is that they repre-sent opposite or competing assumptions. Each continuum high-lights a core value that is opposite from the value on the other end

THE COMPETING VALUES FRAMEWORK 35

CLAN

Stability and Control

Flexibility and Discretion

External Focus and D

ifferentiationInt

erna

l Foc

us a

nd I

nteg

rati

on

ADHOCRACY

HIERARCHY MARKET

Figure 3.1 The Competing Values Framework

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of the continuumflexibility versus stability, internal versus exter-nal. The dimensions therefore produce quadrants that are also con-tradictory or competing on the diagonal. The upper left quadrant,for example, identifies values that emphasize an internal, organicfocus, whereas the lower right quadrant identifies values that em-phasize an external, control focus. Similarly, the upper right quad-rant identifies values that emphasize an external, organic focus,whereas the lower left quadrant emphasizes internal, control values.The competing or opposite values in each quadrant give rise to thename for the model, the Competing Values Framework.

Each quadrant in Figure 3.1 has been given a label to distin-guish its most notable characteristicsclan, adhocracy, market, andhierarchy. The clan quadrant is in the upper left, the adhocracyquadrant is in the upper right, the hierarchy quadrant is in thelower left, and the market quadrant is in the lower right. It is im-portant to note that these quadrant names were not randomly se-lected. Rather, they were derived from the scholarly literature thatexplains how, over time, different organizational values have be-come associated with different forms of organizations. We discov-ered that the four quadrants that emerged from these analysesmatch precisely the main organizational forms that have developedin organizational science. They also match key management theo-ries about organizational success, approaches to organizational qual-ity, leadership roles, and management skills. Moreover, in pastresearch on child development (such as that of Piaget, 1932), cog-nitive maps (Hampton-Turner, 1981), and information processing(Mitroff, 1983), similar dimensions have emerged that help orga-nize the way in which the brain and body work as well as the waybehavior is organized.

The dimensions and quadrants in Figure 3.1 appear to be veryrobust in explaining the different orientations, as well as the com-peting values, that characterize human behavior. The robustness ofthese dimensions and the richness of the resulting quadrants led usto identify each quadrant as a cultural type. That is, each quadrant


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represents basic assumptions, orientations, and valuesthe sameelements that comprise an organizational culture. The OCAI,therefore, is an instrument that allows you to diagnose the domi-nant orientation of your own organization based on these core cul-ture types. It also assists you in diagnosing your organizationscultural strength, cultural type, and cultural congruence.

The Four Major Culture Types

We shall now explain and illustrate each of the four culture types.

The Hierarchy Culture

The earliest approach to organizing in the modern era was based onthe work of a German sociologist, Max Weber, who studied govern-ment organizations in Europe during the early 1900s The majorchallenge faced by organizations at the turn of the twentieth centurywas to efficiently produce goods and services for an increasingly com-plex society. To accomplish this, Weber (1947) proposed seven char-acteristics that have become known as the classical attributes ofbureaucracy: rules, specialization, meritocracy, hierarchy, separateownership, impersonality, accountability. These characteristics werehighly effective in accomplishing their purpose. They were adoptedwidely in organizations whose major challenge was to generate effi-cient, reliable, smooth-flowing, predictable output. In fact, until the1960s, almost every book on management and organizational stud-ies made the assumption that Webers hierarchy or bureaucracy wasthe ideal form of organization b

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